Al Rayan Bank has introduced a new range of home purchase plans (HPPs) to facilitate the move of an existing home finance product to the Sharia-compliant provider. The lender will assist customers by waiving or contributing to the fees associated with refinancing home finance to another provider. Al Rayan will waive the £399 HPP administration fee and the valuation will be paid by the bank, up to a maximum of £600, while the first monthly payment will see Al Rayan pay a cashback of £300 to the customer. The news comes after Al Rayan posted a 228% surge in home finance completions in January as it reported demand for Islamic finance was at an all-time high.
Al Rayan Bank has revealed that applications for two of its home finance plans reached an all-time high in 2016, as demand for Islamic finance soared. Both the bank’s home purchase and buy-to-let purchase plans received a record number of eligible enquiries last year. This surge follows a 9% rise in applications to the bank in 2016, marking a 99% increase over the past five years. Keith Leach, chief commercial officer at Al Rayan, said there was still substantial room for growth in the market and the bank expects demand to continue to rise in the coming years. Al Rayan estimates that 94% of its fixed-term deposit customers who joined last year are not of the Muslim faith. The announcement comes just weeks after Al Rayan launched a Sharia-compliant buy-to-let range in Scotland.
According to Maisam Fazal, head of commercial finance at Al Rayan Bank, Sharia-compliant peer-to-peer (P2P) lenders could soon be coming to the UK market. Despite welcoming more firms to the Islamic finance market, Maisam suggested that rates as low as Al Rayan’s could make it off-putting for potential new entrants. He explained that having competitive rates was paramount for Islamic finance banks, as the cost of funding could make products more expensive. Maisam claimed that Al Rayan was unique in offering lenders Sharia-compliant debt.